2023 (3) TMI 244 - AT - Insolvency and Bankruptcy

Validity of resolutions passed in the 5th COC meeting of the Corporate Debtor - quashing of illegal decision of the COC as passed in the 5th COC meeting - seeking to pass an ex-parte ad interim order staying the decision and/or Resolutions passed in the 5th COC meeting for change of management of the Applicant No. 1. HELD THAT - The impugned order does not grant any interim relief in terms of any of the reliefs prayed in the I.A./656/2023. The limited direction issued by the Adjudicating Authority is however, in order to ensure that the applicant s rights are not adversely affected, the resolution passed in the 5th CoC meeting of the Corporate Debtor vide Item No. B2 may not be further acted upon by the Respondents . Parties in the application were heard on 01st and 2nd February, 2023 which is apparent from the proceedings brought before this Tribunal and fixed 15.02.2023 for hearing which hearing could not take place and date was fixed by the Adjudicating Authority for hearing on 01st and 2nd March, 2023 on the application. No exception can be taken to the order passed by the Adjudicating Authority on 15.02.2023 extending the interim order and fixing the next date on 01st and 2nd March, 2023 - at the stage when the Adjudicating Authority is seized of the application I.A. 656/2023 and had already fixed date on 1st and 2nd March, 2023 for hearing of the application, this Appeal need not to be entertained. Hon ble Supreme Court in Wander Ltd. and Another Vs. Antox India P. Ltd. 1990 (4) TMI 280 - SUPREME COURT had laid down that in exercise by the Court if it is shown to be exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions, Appellate Court can interfere - It is not found that the exercise of jurisdiction of the Adjudicating Authority in the present case is arbitrary, capricious, or perverse. The ad-interim-order passed by the Adjudicating Authority shall not in any manner influence the decision on the application on merits - appeal disposed off.

Summary

Issues:
1. Appeal against an Order dated 02.02.2023 passed by the National Company Law Tribunal, New Delhi.
2. Application filed by Respondent No. 1 in Corporate Insolvency Resolution Process.
3. Prayers sought in the application.
4. Challenge to the Impugned Order by the Appellant.
5. Arguments presented by both parties.
6. Analysis of the Impugned Order and subsequent proceedings.
7. Reference to a judgment by the Hon'ble Supreme Court.

Detailed Analysis:

1. The appeal was filed against an Order dated 02.02.2023 passed by the National Company Law Tribunal, New Delhi. The Order pertained to an application filed in the Corporate Insolvency Resolution Process by Respondent No. 1, a subsidiary of the Corporate Debtor.

2. The application sought various reliefs, including quashing illegal resolutions passed in the 5th CoC meeting, staying decisions related to the change of management, and other necessary orders in the circumstances of the case.

3. The Appellant challenged the Impugned Order, arguing that no specific ad-interim relief was granted, yet the Adjudicating Authority directed not to act upon a specific resolution without providing reasons. The Appellant contended that since the matter was fixed for a future hearing, there was no need for an ad-interim order at that stage.

4. Both parties presented their arguments, with the Respondent's counsel stating that the Order was passed after elaborate arguments, and the direction to not implement the resolution was to maintain the status quo.

5. The Tribunal analyzed the prayers made in the application and noted that the Impugned Order did not grant any interim relief as prayed. It highlighted that all contentions were yet to be considered by the Adjudicating Authority, and the hearing scheduled for a later date was postponed due to the Appellant seeking time to file a reply.

6. The Tribunal referenced a judgment by the Hon'ble Supreme Court, emphasizing that appellate interference with the exercise of discretion is warranted only if it was arbitrary, capricious, or ignored settled legal principles. In this case, the Tribunal found no such arbitrary exercise of jurisdiction by the Adjudicating Authority.

7. The Tribunal concluded that the Adjudicating Authority's ad-interim order should not influence the final decision on the application's merits. Consequently, the Appeal was disposed of with these observations.